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Nigeria_Fixed Income Daily: T-bill yields cap bullish week with further decline

• Market commentary

§ Following yesterday’s OMO maturity (N105 billion), the CBN rounded off the week with another OMO auction, selling N15.1 billion and N78.5 billion on the 181DTM and 356DTM bills (N50 billion on offer apiece) at respective stop rates of 18.0% and 18.6% (effective yields: 19.76% and 22.72%). Amidst this, Interbank Call rate inched 17bps higher to 3.17%. At the FX interbank market, the naira held at N305.50 against the dollar at the spot market whilst depreciating N29.00 to N378.00 at the one year forward market.

§ With liquidity still buoyed by yesterday’s maturity inflows, the T-bills market capped off a bullish week with yields declining a further 21bps on average. Yield declines were concentrated at the shorter end of the space with yields on the 55DTM (-167bps), 90DTM (-163bps), and 97DTM (-159bps) bills moderating to 14.37%, 14.10%, and 14.71% respectively. Meanwhile, the bond market traded flat with yields on benchmark bonds trending in opposite directions. Whilst yields on the 14.20% FGN MAR 2024 and 12.40% FGN MAR 2036 bonds moderated 2bps each to 15.81% and 15.99%, yield on the 15.54% FGN FEB 2020 bond advanced 4bps to settle at 15.91%.

§ Notwithstanding resilient bullish sentiment in the T-bills market, we expect more cautious trading across the fixed income space at the start of next week in anticipation of November Inflation figures and the Bond Auction, both due on Wednesday.